Axon Enterprise (AXON) reported second quarter 2026 results with revenue of US$904.39 million and net income of US$29.43 million, and also raised its full year 2026 revenue growth guidance to a range of 32% to 34%.

Axon Enterprise shares have climbed over the past quarter, with a 30 day share price return of 18.43% and a 90 day share price return of 54.03%. However, the 1 year total shareholder return has declined 23.66%, so short term momentum looks strong compared with the weaker recent long term picture.

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After Axon Enterprise's sharp move higher and a share price still below the average analyst target yet above some intrinsic value estimates, the real tension is where fair value now sits. How does that spread look on the numbers?

Most Popular Narrative: 40% Undervalued

Axon Enterprise last closed at $604.32, while the most followed narrative on Simply Wall St places fair value at $606.83 using a 10% discount rate. According to AryaWinningSon, that valuation leans heavily on Axon Enterprise progressing from a hardware centric story toward a software and data platform for public safety.

One company I find particularly interesting is Axon Enterprise. Many investors still associate the company primarily with TASER devices, but I think the more compelling part of the story is how Axon has quietly transformed itself into a software and data platform for public safety. What began as a hardware business is increasingly becoming an ecosystem built around digital evidence, cloud software, and connected policing tools.

Curious what sits behind that valuation gap. The narrative leans on recurring software revenue, richer margins from digital services, and a long runway baked into the cash flow forecasts. The real surprise is how the profit profile is expected to evolve if Axon Enterprise keeps scaling its public safety platform.

Result: Fair Value of $606.83 (UNDERVALUED)

However, Axon Enterprise still faces risks if public safety agencies slow contract signings, or if software adoption lags and the mix remains skewed to hardware.

Another View: Our DCF Model Flags Axon Enterprise as Overvalued

The user narrative sees Axon Enterprise as about 40% undervalued at a fair value of $606.83. Our DCF model points in the other direction. On those cash flow assumptions, fair value sits at $438.36, which leaves the current $604.32 share price looking rich instead of cheap.

That gap between narrative and numbers raises a blunt question. Is the market already pricing in more of Axon Enterprise's software shift than the story assumes, or is the DCF model too cautious about how quickly those cash flows can build?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Axon Enterprise for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 53 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

The mixed signals around Axon Enterprise can feel confusing, so take a moment to look through the full data set and decide where you stand. To balance the optimism with the concerns, review the 1 key reward and 3 important warning signs.

Looking for more investment ideas beyond Axon Enterprise?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.